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  #81  
Old 09.12.2009, 19:53
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Re: Just bought a house!

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What are the potential effects of the abolition of Eigenmietwert on house prices? And whats the chance of this happening in the next few years?
With eigenmietwert: the banks try to convince you to exactly cancel out the eigenmietwert tax penalty with the mortgage deduction advantage...the result is 20 percent down payment. Of course, this is also what they want you to believe, they make their money by lending the remaining 80% to you.

Banks are inherently evil, by the way. They look out for number one first, and you can be assured you are not it.

When eigenmietwert is abolished...best to pay off the loan to the best of your ability.

Chances of this happening soon? Very high. It is a hot topic now on the federal level as a huge swath of the (rich and influential) population enters retirement, and do not want this artificial tax burden in their twilight years.
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  #82  
Old 09.12.2009, 20:43
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Re: Just bought a house!

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Answer to your first point: both I and my wife work (100% and 50%). We purposefully qualifed for the loan based soley on my wife's income so that in the case I lose my job, even long-term, her (50%) income can pay the mortgage. She works in the health-care sector, with very little danger of losing her job.

The point about finding something "better", sorry, what we found here is more than adequate to last us until the end. No need to move "up" to a bigger house with swimming pool, etc., we are not trying to impress anyone, and are more than happy with what we have.
Congratulations- looks like you thought it all out thoroughly! Swimming pools are a pain anyway unless you can use them year round.
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  #83  
Old 09.12.2009, 21:57
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Re: Just bought a house!

Congratulations Karl! and many thanks not only for sharing those valuable details, but also for enlightening many of us on the process. I also own a house and your reasoning around the retirement strategy in this thread has given me lots of good tips!
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  #84  
Old 10.12.2009, 09:24
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Re: Just bought a house!

Specifically, will house prices rise after it is abolished?

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With eigenmietwert: the banks try to convince you to exactly cancel out the eigenmietwert tax penalty with the mortgage deduction advantage...the result is 20 percent down payment. Of course, this is also what they want you to believe, they make their money by lending the remaining 80% to you.

Banks are inherently evil, by the way. They look out for number one first, and you can be assured you are not it.

When eigenmietwert is abolished...best to pay off the loan to the best of your ability.

Chances of this happening soon? Very high. It is a hot topic now on the federal level as a huge swath of the (rich and influential) population enters retirement, and do not want this artificial tax burden in their twilight years.
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  #85  
Old 10.12.2009, 13:14
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Re: Just bought a house!

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Specifically, will house prices rise after it is abolished?
My eigenmeitwert is almost as much as my part time salary, so without mortgage interest deductions it would double my income. Interest rates would have to be at 4% to fully offset my eingenmietwert - but then you are just paying the bank instead of the tax man. I will also be paying the taxes on eingenmietwert into retirement when I have no income and if I have no mortgage, asset taxes as well

I think that house prices have got to increase if eingenmietwert is abolished.

I've put off plans to extend since any renovation that adds to your house's value will increase our eigenmeitwert.
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  #86  
Old 10.12.2009, 13:27
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Re: Just bought a house!

I disagree on prices increasing due to this. There are areas of the market where people are causing inflationary pressure because they're buying properly in order to avoid having money in the bank.

My opinion is that the Swiss housing market is exceedingly interesting. Demand is high for rental and for buying, depending where it is, can be either a buyers' or sellers' market.

Renovation usually will not change the rentable value of the property - unless it is exterior.
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  #87  
Old 10.12.2009, 13:41
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Re: Just bought a house!

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I disagree on prices increasing due to this. There are areas of the market where people are causing inflationary pressure because they're buying properly in order to avoid having money in the bank.
Buying property to reduce the amount of money in the bank is mainly to avoid taxes on assets.

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Renovation usually will not change the rentable value of the property - unless it is exterior.
Our Eigenmietwert is calculated from the purchase price. Any renovation that adds to the property value is then added on top of the purchase price as a Mehrwertung. An extension will certainly add value. What I need to find our is it that increase is value is determined by the amount you spend or from the tax department's valuation. It would be another level on the house where we already have 3 glass walls and a roof. We have heat tubes, but no heat, so the extension will be one wall and heating, one extra room and it is just less than 10% extra living space.
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Old 10.12.2009, 13:47
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Re: Just bought a house!

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Buying property to reduce the amount of money in the bank is mainly to avoid taxes on assets.
Bingo. Avoiding tax and the fact that there is little return on anything in a normal account as interest rates are so low.

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Our Eigenmietwert is calculated from the purchase price. Any renovation that adds to the property value is then added on top of the purchase price as a Mehrwertung. An extension will certainly add value. What I need to find our is it that increase is value is determined by the amount you spend or from the tax department's valuation. It would be another level on the house where we already have 3 glass walls and a roof. We have heat tubes, but no heat, so the extension will be one wall and heating, one extra room and it is just less than 10% extra living space.
You're changing the outside. That for me falls into the area of exterior renovation....
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  #89  
Old 10.12.2009, 14:33
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Re: Just bought a house!

A simple article (Aug 2009) on whether ex-pats in Switzerland should buy or not

http://www.swissnews.ch/backissues/2...n08_012_14.pdf
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  #90  
Old 10.12.2009, 14:40
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Re: Just bought a house!

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You're changing the outside. That for me falls into the area of exterior renovation....
So adding an extra bedroom with changing external walls shouldn't add any value? At the moment on the first floor we have 2 big bathrooms and 2 big bedrooms (17m and 26m2). Changing this space is more expensive than the roof room, but would also create a 3rd upstairs bedroom.

On the Eigenmietwert calculation form they ask for the number of rooms. If we were to put +1 room, but no increase in value, surely they'd ask some questions.

I'll look up the renovation thread that someone recently stared.
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  #91  
Old 10.12.2009, 14:53
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Re: Just bought a house!

My friends make Grappa with their grapes. It is like drinking "sunshine in a glass!"

Cheers!

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Thanks, but the previous owners completely renovated this house, built out he attic, put down new stone tiles on all floors, built out a guest room in the basement with underfloor heating...there's nothing to do...the house is in immaculate condition! We even have 10 meter wide mature hedge of grape vines...what do I do with all these grapes?
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  #92  
Old 10.12.2009, 18:10
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Re: Just bought a house!

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Specifically, will house prices rise after it is abolished?
A good question. As the abolition of Eigenmietwert will only come in tandem with some sort of abolition of tax relief on mortgages, I feel there will be no difference. One will tend to counteract the the other and tax authorities are not going to lose much out from both changes.

People with holiday homes and multiple homes where they have been allowed to claim tax relief on all mortgages, may think of selling. But there again, those nearing retirement who will no longer have the notional rentable value of their property added to their income throughout their retirement, may think of buying...
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Old 03.02.2011, 10:04
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Re: Just bought a house!

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Specifically, will house prices rise after it is abolished?
all else being equal, if it's abolished, then yes, this will mean HP will rise.

BTW, does anyone have a resource for calculating eigenmietwert? i need this to do a financial cost/benefit analysis of owning versus buying.
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Old 03.02.2011, 10:14
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Re: Just bought a house!

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BTW, does anyone have a resource for calculating eigenmietwert? i need this to do a financial cost/benefit analysis of owning versus buying.
This is calculated by the local council and seems to be a on very vague system including the number of rooms and how many people live there. Some councils recalculate every year, some leave it.

For Canton Zurich see:
http://www.steueramt.zh.ch/html/erla...ternutzung.htm

There they give the example for a house:
9-room house, rental value formula 36'000 .- Fri inhabited by spouses, do not live their three adult children in the family budget. Three rooms are empty.

Calculation of the imputed rental value:

Rental value = Fri 36,000 x 8 (6 rooms + 2 rooms)
11 (9 rooms + 2 rooms) = CHF 26'100
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Old 03.02.2011, 11:51
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Re: Just bought a house!

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So we just moved into the house that we bought. It's got everything we wanted, nice private garden, quiet sunny location close to schools, train, motorway, shops, 20 minutes from Zurich, bedrooms for all, built out attic, large cellar, even has the bomb shelter (aka wine cellar). The surrounding countryside is beautiful, surrounded by woods, farms and castles within biking distance.

Details:
Price: 685K
Down payment: 325K (used my entire pensionfund)
House: 19 years old, solid, in immaculate condition, fully renovated.
Interest rate on the loan: 2.35% for 5 years, resulting in 675 CHF / month...we have been paying 2600 CHF in rent for an apartment for the past 14 years!

With pensions getting only 2% interest, and their viability in question, I just think this is the better way to go. My pension was racking up only 541 CHF per month in interest...by rolling over into the house we save 2000 in rent. OK, some tax penalty for the Eigenmietwert, but we still come out ahead. What's the catch here? Why doesn't everyone do this?
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My advise is this for buying a house in Switzerland. Only do it if:
- you are 90% sure this is where you will be staying here for the long term (at least 10 years, optimally until retirement)
- the above criteria then infers that you should become fluent in the local language, at least to a high functioning level (high German OK)
- and decided to fully integrate here (to the best that a non-native Swiss can do it)
- start having more Swiss friends than UK/American ones
- don't hang out in foreigner clubs because these are primarily not the type of people who will stick around very long
- send your kids to the normal Swiss schools, fully acknowledge that they will consider themselves Swiss after a number of years here
- after your 12 year waiting period, get Swiss citizenship and vote
- do not buy real estate with the expectation that it is an ATM machine or a lucrative investment
- join a local Swiss Verein (club)...they have all sorts here
- learn to ski and go regularly
- start taking your holidays in Switzerland instead of flying back to the UK, Australia, US etc.
- read the local news, i.e. Tagesanzeiger, 20 Minutes, etc.
- watch local TV stations, particularly news to find out what is really going on here
- become aware of the political issues in the country
- play by the rules here, written and unwritten

It is still OK to hang out on this forum "for old times sake"
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Yes, that is why we are putting away the money we save each month from what we used to pay in rent, which turns out will be exactly enough to pay off the mortgage in 15 years...precisely when I reach retirement age. We can of course partially pay it down earlier.

All this is possible by buying a house we could afford, and not the most expensive one we could buy with only 20 percent down (also known as "buying more house than you need, with money you don't have, to impress people you don't like).
Wow Karl, thanks for the post, Glad that you cared to share, and congrats on the new sweet home
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Old 03.02.2011, 12:10
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Re: Just bought a house!

For some reason, Karl's threads always remind me of this:



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Old 03.02.2011, 12:13
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Re: Just bought a house!

Hey, I am so pleased for you. Hurray.

BTW we bought much more house than we need, but not to show off, but because we love space. If that is what 'you' want - then you just have to go and look away from those Rivieras and big (? relatively we are in CH) towns. Prices in the Jura are still incredibly low for lots of space. I'd happily swap space for all mod cons any day. Apart from that, up here we spend the whole winter in sunshine instead of the awful lake side 'peutsch'. (Roman word for horrible grey fog).

Our very old Neuchatel farmhouse is a very lovable monster.

Last edited by Odile; 03.02.2011 at 12:50.
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Old 03.02.2011, 14:17
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Re: Just bought a house!

Won't abolishing the eigenmietwert affect the rights of renters? Will rents rise?
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Old 03.02.2011, 14:26
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Re: Just bought a house!

DB - bought for the price of a 2 up 2 down in the Midlands, or a 1 bed flat in London.
Yes Switzerland CAN be much cheaper than UK, but it is a matter of location, as always.
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Old 03.02.2011, 15:36
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Re: Just bought a house!

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I'd happily swap space for all mod cons any day. ...
Our very old Neuchatel farmhouse is a very lovable monster.
It can be surprisingly inexpensive to modernise a small area, like a bathroom, to be uber modern inside, leaving 98% of the building as it should be.

Would be great to see a pic from the outside. But then that might spoil the dream picture I have in mind already.
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